TORONTO, June 27,
2024 /CNW/ - Small businesses expect to increase
prices by an average of 2.5% over the next 12 months, according to
the latest Canadian Federation of Independent Business (CFIB)
Business Barometer®. This indicator dropped from the 2.8% reading
in May and is below the upper band of the Bank of Canada's target range for inflation of 3%.
Small businesses also plan to increase wages by an average of
2.5% in the next 12 months, compared to 2.8% in May. The last time
this indicator was lower (2.3% in August
2021) was almost three years ago.
The path for both the price and wage plans indicators in the
last two months suggest the uptick recorded back in April may have
been a temporary blip only.
"Both plans are moderating, suggesting that inflation is on the
right track. However, prices remain elevated and nowhere near their
2019 levels," said Simon Gaudreault,
Chief Economist and Vice-President of Research at CFIB. "Other
survey indicators and comments from our members tell us that
business conditions remain brutal, and the pressure is still very
much there for a sizeable share of firms. Moreover, we have had
only one interest rate cut so far, so it will take a long time
before we experience significantly improved borrowing costs and
overall demand as a result of the Bank of Canada's loosening monetary policy."
Various sky-high costs, such as insurance, occupancy and
borrowing, were causing challenges in June for 67%, 48% and 46% of
businesses, respectively. Notably, borrowing and occupancy costs
are a concern for twice as many firms now as before the pandemic,
with both of their historical averages sitting at 24%.
Lack of demand remains the top limitation for nearly half (49%)
of businesses, preventing them from expanding their sales or
production. Also of note is the 46% of businesses reporting
limitations due to skilled labor shortages, which is a full ten
percentage points above the historical average for this
indicator.
The small business 12-month confidence index remained roughly
stable, shaving off 0.3 index points to 56.3 in June. Although this
represents a two-year high (on par with last month's reading), the
index is still below its historical average of 60.
"On one hand, more small businesses have recently reported
feeling optimistic over the long term. Most sectors and provinces
also saw small improvements in long-term optimism this month," said
Andreea Bourgeois, Director of
Economics at CFIB. "On the other hand, we need to keep in mind that
the situation for many businesses is far from rosy, and many are
still hanging on by a thread. Whatever the broad macroeconomic data
may be suggesting at the moment, it seems clear that Main Street
has not solidly recovered yet."
Methodology
June Business Barometer®: June findings are based on 662
responses from a stratified random sample of CFIB members to a
controlled-access web survey. Data reflect responses received from
June 4-17. Findings are statistically
accurate to +/- 3.8 per cent, 19 times in 20. Every new month, the
entire series of indicators is recalculated for the previous month
to include all survey responses received in that previous month.
Measured on a scale between 0 and 100, an index above 50 means
owners expecting their business's performance to be stronger over
the next three or 12 months outnumber those expecting weaker
performance. An index level near 65 normally indicates that the
economy is growing at its potential.
About CFIB
The Canadian Federation of Independent Business (CFIB) is
Canada's largest association of
small and medium-sized businesses with 97,000 members across every
industry and region. CFIB is dedicated to increasing business
owners' chances of success by driving policy change at all levels
of government, providing expert advice and tools, and negotiating
exclusive savings. Learn more at cfib.ca.
SOURCE Canadian Federation of Independent Business